Railroad Commission of Texae

GentlemenI Opinion No. O-3611' Rer Validlty'of "grand-father" Provision in-H. B. 351, 47th Leg., and aonstruotlon tobe placed thereon,

In your letter of recent dateyou direot attention toHouse'Bi.11NO. 351, Forty-seventh Legislature, and advise us of the following facts:

"

.heretofore the Railroad Commission ofTexis'ln the issuanoe of special oommodlty permite has not onlynot required pleadinga and proof that the pub110 oonvenisnoe and necessity required the operations aontemplated by said permits buthaa not permitted such pleadings and proof;,and saidpermits--
some 1200 innumber--are now outsijanditig without there
everhaving been any pleadings orproof that the putaio convenle~noeand neoeasity required the operations or that the existing faaillties were inadequate.' theholdera thereof authority to transport all of the

Moreover, many of theas pennits give

oommodlties named in the spooLa oommodity statute but Ina great number of oases theholders have transported only aportion of thenamed oommodltiea.n

The 'Actreferred toprovides for the issuanoe - of ltspeolalizedmotor oarrler'1certificates for authority to conduct certain motor oarrler operations. Special oommodlty carriers, as they have been heretofore called, holdingpermits Issued under Secti& f3(d)of Article Qllb, Vernonla ¬ated CZvil Statutes, would be replaced by carriers holding speo,ializadmotor carrier certlfloktes. The new statute contains'ths following provision?

"j(b)..

. Wprovided further that any pereon to'rhom a "Spsoial Commodity" permit for tha transportation of any 

### orall-of eald oommoditiss had bean issued under theprovFslons of Seotfon 6,paragraph (d),Artiole-911b, Title- .

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25,Revised Civil Statute8 of the State of Texas, 1925, as amended, if such "Special Commodity" permit shallhave bean in force and effect on January 1, 1941, and if such person or lredcessor in interest may desire to continua inthebusinsss of amotor carrier of suchcommodity orcommodities shall file an application for a certificate of conveneince and necessity under the terms of this Act within sixty (60)days after the affective datehersof, it shall be theduty of the Commission to issue without further proof a certificate authorizing the operation as a "Specialized Motor Carrier" for the transportation of such commodity or commoditisa oovdred by the ttSpecialCommodity" permit held by the applicant, which %pecialized Motor Carrier" certificate shall bs issued to the applicant-and include all the rights and privilegsa granted under said "Special Commodity" permit."

You request our opinion in response to twenty-one que.stiona,reading as follows:

"First

"In view of such decisions a8 Cincinnati Tra&tion' Company vs. P.U.C. of Ohio, 150N. E. 308, Gollsn Gats Ferry Company vs Railroad Commission of California, 268Pacific 355, State 8x rel Hanson vs. Brown, 31 S. W. (2) 208 mo.1, In rs Stanley, 174 Atlantic 93 (Maine), and Gruber v8 Common wealth, 125 S.E. 427.(Virginie)
isHouse Bill 351, wherein itdirects, if it does direot, this Commission, without notice orhearing, to issue grandfather certificates ofpublio convenience and necssaity toholders ofpreexisting special commodity permits 'in force and effect
on January 1, 1941', valid and constitutional insofar as such grandfather certificates might be granted with respect to commodities named in thepreexisting special commodity permits but which commodities wers not being actually transported on January 1, 1941, and prior thereto?
Second. .

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"Or is said House Bill 351 valid and constitutional only,whenadministered end applied in such fashion as tobring about an issuance by this Commission of grandfather certificate8 to the holder8 ofpreexisting special commodity permit8 with respeht ONLY tonamed commodities which such holders were actually transporting forhire on January 1, 19411

Second-A

"la itmandatory upon this Commission to hold hearings upon eaoh of the grandfather applications contemplated by H. B. 351 for the purpose
"(a) of determining whether each special commodity permit was 'in force and effect on January 1; 1941' as to each commodity named therein'or should the Commiaaion,f~rom amere study of its own record8 issue a grandfather certifioate to each applying special commodity permittee, where theCommisslon*a record8,ahow such an-outstanding permit,--writing the grandfather certifioate in suchfashion as togive the holder thereof authority totransport thevery same commodities named in the special commodity permit whether SUGh special commodity permittee
was actually transporting all of said commodities
on January 1, 1941, ornot?
'l(b)Or is itmandatory upon this @ommission to set forhearing each of said grandfather epplications and on thebasis of such hearing issue to such applicant a grandfather certificate limited, not toall of the commodities named inhis preexisting special commodity,permit, but only tothe commodities named in said permkt andwhich were being actually transported by thepermittee on January 1, 1941, and prior thereto,-- this, on the theory that such preexisting~permit was not in force and effect on January 1, 1941, as to named commodities not being actually transported on that date and prior thereto?
Third

"Inview of the fact that House Bill 351 isan amendment to,,theexisting Motor Carrier Law of Texas, should this Commission, in the application and adminis-. .

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tration of the Motor Carrier Law as amended byHouse fill 35., take theposition that said Rouse Bill351, insofar a8 itauthorized the grant of grandfather certifioetes covering a commodities named in thepreexisting special commodity permits but which werenot being actually transported forhire on January 1, 1941, and prior thereto, is unconstitutional as thus construed; and, for that reason, inview of the rule that the Comuiasion should go in the direction of constitutionality, ifpOSSibl8, set forhearing all applications for grandfather certificates and grant such certificates only if andwhen there shell be pleading8 and proof of justwhich commodities named in the preexisting special commodity permits were being actually transported on January 1, 1941, and then, upon such pleadings and proof, reduce the grant of right8 in such grandfather certificates down to the right to transport only those COmmOd%tieS shown tohave been actually transported on January 1, 1941, and prior thereto,--taking theposition that such preexisting special commodity permlta were fin force and effect on January 1, 1941' onlywith respect to those commodities named therein which were actually being transported on January 1, 1941, end prior thereto, and that there had been an abandonment by theholders of said special commodity permits of the right to transport commodities named in their speoial commodity permits but whiah were not being aotually transported
on January 1, 1941, end prior thereto?

Fourth "Assuming that there are a large number of outstanding special commodity permits which,
on their face, give the right to transport all
or nearly all of the commodities named in the special commodity statute but under whioh there was a failure actually to transport some of such commodities on January 1, 1941, and prior thereto,has the right to transport said commodities not so actually transported been abandoned in suchfashion asnot tohave been 'in force and effect on January 1, 1941,' insofar as commodities not actually transported on that date and prior thereto are~concerned,notwithstanding the fact that the Commission never, et any time, took any statutory steps to cancel for abandonment said permits after notice and hearing insofar as the commodities not so actually transported are concerned. Fifth wAa8uming that we should reduce the grand-. .

Railroad Commisstor,of Texas, Page 5, O-3611

father rights down to the,right to %xnnspont commodities actually transported on January 1, 1941, and prior thereto, then and in that event, inview of thewording ofHouse Bill 351, doss this Commission have the power to give tiotices andhold hearings and make findings; and, thsreon, issue,grandfather certlfic,atescovering only commodities actually tranepor~tedon January 1, 1941, andprior thereto,--conducting ‘sucb.hearingsand giving such notioes making such fandings under the Motor Carrier Law of Texas as it stands as amended by House Bill 351 or doing so independently ofHouse Bill 351P \
Sixth
-- “Assuming,that House Bill 35& i&unconstitutional as to oommoditites note~actu@llgbeing transported eonJanuary 3, 1941, andprior thereto,
even when ,.considered, in connection w,iththepre- - existing provisions of the,MQto.r.~ Carrier hot, does theRailroad Commission of Texas, under itsrulemaking power, have authority,,independently of the unconstitutional protions of’HotiseBill 351, to adopt aplan by general order.or’rula ofhearing the special commodity permittees and allowing them to prove the public convenience and necessity and inadequacy of existing facilities and, ‘uponsuch pleadings and proof, grant to them grandfather certificates givtng the authdrity to transport for hire such commodities as thcpubllc convenience and necessity requires tobe transported and with respect towhich the existing transportation fac.ilitFesare inadequate?

Seventh “Assuming that House Bill 351 ,isinvalid as to:~cotioditiesnot actually transported on January 1941, and prior thereto, and assuming ,thatwehave no’power toval’idateoutstanding special commodity permits in themethod’indicated byethepreceding question, then and in that event
(a) is the remainder of House Bill 351valid? 

### 1,

(b)If valid, does the Railroad Commission of Texas have any alternative other than to require theholders of outstanding special ,commoditypermits to come in. .

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under such validportions and prove the public convenience and ;lecessityand the inadequacy of existing facilities just as though theyhadnever held any special commodity permits?
(c) If said remainder ofHouse Bill 351 is invalid, is itmandatory upon theRailroad Commission of Texas tocancel out all outstanding special commodity permits?

1 Eighth
May a certificate of public convenience and necessity ora contract carrier permit ora special commodity permit beabandoned, inwhole
or inpart, with no operations thereunder, and still remain 'in force and efrectr even where the Railroad Commission of Texas fails, afternotice and hearing, tocancel the same on the grounds of abandonment of service under the cancellation provisions of theMotor Carrier Act?,

Ninth

"In detail, justwhat steps should this Commission take under House Bill 351 in order to carry out and administer said bill inaccordance with its intent andpurpose?

?Chepassage ofHouse Bill 351 was passed as a result of the decision of theAustin Court of Civil Appeals inThe T and P Railway Cob vs. Railroad Commission ofTexas(and Thomas G.Runter).

Tenth

"If the Supreme Court of Texas upholds the Austin Court of Civil Appeals in theHunter Case, (a)will all of such special commodity permittees be in exactly the same position they were inprior to the passage of House Bill 351 if said grandfather clause of said Bill is invalid, (b) or, ifnot in said same position, how shall theyproceed and how shall this Commission proceed to cure thevices and defects pointed out in saidHunter case?
Eleventh

"In connection with those questions listed above having to dowith the words 'in force and effectt:Railroad Commission of Texas, Page 7, O-3611

were any of our some 1200 special commodity permits in force and effect in view of thedecision in the Hunter case?

Twelfth

YOUr attention is called to thewords of Rouse Bill 351 reading: 'if such person orpredecessor in interest may desire to continue in thebusiness of
amotor carrier of such commodity or commoditiest, and, in connection therewith, we ask this question:

“HOW shall the Commission proceed to determine what business anyholder of apreexisting special commodity permit was engaged in at anygiven time andhow shall the Commission proceed~to authorize him to continue in such business?

Thirteenth

"Some special commodity permittees not only donot exercise all of the rights shown on the face of their permits, so far as commodities are concerned, but they also donot exercise all of their named rights, SO FAR AS AREA IS CONCERNED, andwe now request you to give usyour opinion with respect to AREA inall instances indicated above where wehave asked your opinion with respect to COMMODITIES?

Fourteenth

"The grandfather clause seems toauthorize the Commission to issue a certificate to aholder of a special commodity permit authorizing suchholder 'to continue in the business ofamotor carrier of such commodities' ashe was engaged in on January 1, 1941. In order for the Commission to issue such certificate to carrier so thathe can continue in the business of
amotor carrier ashe was engaged in onJanuary 1, 1941, how is the Commission todetermine what business the carrier was engaged in, bothwith respect to commodities and area, on such date; andwhat procedure should be followed to ascertain the extent of the authority that should be embraced in the certificate issued and enable such carrier to continue in such business?
Fifteenth

fl~ndetermining whether each special commodityRailroad Commission ofTexas, Page 8, O-3611

permit was tin force and effect on January 1, 1941' would the fact that a particular permit was under suspension on January 1, 1941, or since that date, disqualify said applicant for a certificate of convenience and necessity under the so called 'grandfather' clause of said Act?

"In conneotion with the above and foregoing question, your attention is directed to the fact, and the same isnow stated toyou as a fact, that from time to time holders of special commodity permits apply to this Commission for authority to suspend service for a certain pe,riodof time under their particular permit. The length of time of suspension varies, but it isusually for aperiod of sixmonths. These suspensions are granted by the Commission without hearing and all that is done by the Commission is to onter an order approving the suspension for a spgat;fc& period of time.
Sixteenth
"If, end in the event,your answer to theabove and foregoing question is in thenegative, than please advise us in connection with the followingr
"(a)Would theholder of the special commodity permit, which was under suspension, be required to reinstate said permit by filing proper insurance and fees before the Commission could consider, or issue, to theapplicant a certificate under the so called 'grandfather' clause of said aat?
(b)Would such actshave tobedone before the applicant aould legally file a 'grandfather' application?

“(C-l In the event that apartZau1ar. special commodity same, and permit was under suspension, by order authorizing

said order, for example, authorized thepermit to remain in suspension until September 1, 1941, would said perml.tholder be required toreinstate saidpermit before this Commission oould consider, or grant to him a certlfioate under the socalled rgrandfatherr clause of said act?



## “la) Orwould 'the and authorized under saII ermitholder be allowed, dAct, to obtain a csrtifloate under the -rgrandfatharrclause of theAot, and said grandfather certificate thanremain under suspension until September 1, 19414. -

Railroad Commission.of.Taxas, Page 9; O-3611

Seventeenth

"Is determining whether,or not a s,pecial commodity permit is in 'force and effect on January 1, 1941, ras toboth commodities and territory, is thimsCommission totake in,to,consideration any amendment,thatmay have~,been.granted, to thepermit subsequent ,toJanuary 1, 1941, andprior to ,theeffective date on the act, pr shallwe only consider,the permit as being in, 'forceand effect' as to those c~onunodities,, and the territory covered and named, in then. permit as of January 1, 19411 In other words would the gran~dfathsrcertificate, as amaximum,,aoier,only such commoditi,e,s, and territory as.was,authorized in the permit as of:January 1,~1941,or should,ws consider any amendment granted to the,permit subsequent to January l.,1941, and prior to the effective date of the act? Eighteenth

"By the express terms of theAct aperson is prohibited from holding both a oommon carrier certificate and .aspecialized motor carrier cert~ificate. In your opinion, having special reference to your prior opinions on ths subject, and the present Motor Carrier Law, may one and the same person hold both a contract carriers permit and
a specialized motor carrier certificate?

"In connection with tht 'abaysand foregoing question it isnow stated toyou as a fact that there are anumber of operators within the state thathold both a special c.omtnodity psrmit and contract carriers permit.,

Nineteenth

%Ouss Bill 351 provides for a filing fee of $25.00, and specificially states that this CommFssion shallnot consider, etc., any application unless it is accompanied by a filing fee of $25.00. But in this connection you'rattention is ~directedtothe following factsl We now have on hand a,number of special commodity permit applications which have (1)either be&heard andnot yet ac'tedupon,~(2) ornot set forhearing, button file, (3) or set forhearing but not yet heard or actad ,on. Each of these applications were accompanied by a filing fee of $lO.bO as,required by.theRailroad Copunisslonof Texas, Page 10, O-3611

present law. With these fasts inmind please advise us in connection with the followingI
"(a) Are we authorized to apply the $10.00 filing feewhloh has been paid on those speolal commodity applications which have been filed, and heard, but not acted upon, on the $25.00 filing fee required under House Bill 351 for all applications for certificates to operate as a specialized motor carrier?
"(b)Are we authorfzed toapply the $10.00 filing feewhich has been paid on those,special commodity applioations whioh have been filed, and set for hearing, but not yet heard or acted upon, ontha $25.00 filing fee required under House Bill 3519
"(c)Are we authorized to apply the $10.00 filing fee whioh has been paid on those speoial oommodity applications which have been filed, but neither set forhearing, nor heard, nor act&d upon, on the $25.00 filing fee required under House Bill 3511
Twentieth "Assuming that an applicant isnot eligible for a-spedialized motor carrier certificate under the socalled 'grandfather* clause ofHouse Bill 351, and he, therefore, files his appllcatlon and seeks to prove publia convenienae and necessity, - inproving, or attempting to prove that present and existing service is inadequate, wLl1 such applicant have to take into consideration and prove that all services (including regular route common carriers) are inadequate, orwill he onlyhave toprove that the present servioe of existing speoialized motor carriers is inadequate?"

We think itwell, first to consider thestatus of the special commodity permits granted by theRaFlroad Commission and outstanding on January 1, 1941, and which had been issued without theh~earingof any .evldence on the question ofpub110 aonvenience andnecessity. In the case of Texas'& Pacific Ry. Co. v. Railroad Commission, 138 S.W.r (2d) 927, theAustin Court of Civil Appeals set aside a speaial'commodity permit, holding that public neaessity had tobe alleged, proven and found, as in the aaae of common carriers. In effeot, the Court of Civil Appeals s,aidthat., .-

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if the Statute should be construed soas to permit the grantFng of such permits without suoh allegation, proof and finding, itwould be diacrimlnatory and unconstitutional. This department, disagreeing with the opinion of the Court Of civil AppeELb, filed an application'for'writ of error to the Supreme Court. The writ was granted and the casewas submitted onbriefs and oral argument several weeks ago, but the Supreme Court has not yet announced its decision In the 0898. The Supreme COUPt has r8qUest8d aounael for the parties in the T. & P. case tos,ubmitto the Court their views ooncerning the possible effect of this B. B. 351 upon the permit involved in that case. We think the Commission should accept and file all applic'ationsto convert special commodity permits into specfalized motor carrier ce.rtificates, but that such applications should not beheard and determined until the Supreme Court disposes of the T. & P. Casey. If there isUnexpected delay,in the disposition of that cas8 and then88d to determine these applications becomes pressing
we shall then be glad to give gou'our opinion as to the proper course topursue.

In the light of what wehave said above, we'beg not toanswer at this time your questions Ros. 1, 2, 2a, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17,,18 and the questions contained inyour letter of June 20, 1941.

In Seotion 58(c) .theCommission isprohibited from hearing or determining any application for a specialiZ8dmotor carrier certificate (except the grandfather), unless the application shall oontain certain allegations, among them being:

It'3. It shall beaocompanied by amap, showing the territory within which, or thepoints to or from
or between whioh, theapliCant desires to operate, andshall COnthin a liaE of any existing transportation company or companies serving such territory, and shall point out the inadequacy of existing transportation facilities or service, and shall specify wherein additional facilities or servioe are required and would be s8cUr8d by the granting of said application.
"r(d)

. . .The Commission shall have no authority to grant any application for a certificate of convenienoe and necessity authorizing operation
as a "Specialized Motor Carrier" or any other common carrier unless it is established by substantial 8Vid8nCe (1) that the services and facilities of the existing carriers serving the territory or anypert*

.

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thereof are inadequate; (2) that there exists
apublic necessity for such service, and (3) the public convenience will be promoted by granting said applioation. The order of the Commission granting said application and the oertificate issued thereunder shall bevoid unless the Commission shall set forth in its order full and complete findings of fact pointing out in detail theninadequacies of the se~rvioesand facilities of the existing carriers, and the public need for the proposed service. Likewise, the Commission shall have no authority to grant any contract carrier application for the transportation of any commodities inany territory orbetween anypoints where the existing carriers are rendering, or are capable of rendering, a reasonably adequate servioe in the transportation of such commodities.
"r(e) Except where otherwise provided, applications for and holders of certificates of public convenience and necessity, as provided for in this Section, shall be subject toall of the provisions of the Act relating to common carriers bymotor vehicle."

Based on the above, we answer your twentieth question by saying that in our opinion the character of services being rendered by existing common carriers as well as specialized ,oarriersmust be considered. If viewing all the existing services of the different carriers, there isno need for the operation applied for then the application should be denied. On the otherhand, ifall theexisting facilities fail to properly serve the territory as to the commodities sought tobe transported then the certificate may begranted.

Special commodity applications now pending, as we understand, donot contain allegations meeting the quoted requirements of an application under thisAct. Hence, new applications or amended applications satisfying such requirements will have tobe filed before the tipecializedcertificate may issue. Section 5a(f), H'.B. 351, requires every application under such~Section to be accompanied by a filing fee of $25.00. I;tis our opinion that $10.00 fees deposited with the pending special commodity carrier applications may be allowed as a credit on suoh $25.00 filing fee andwe answer eachRailroad Commission of Texas, Page 13, O-3611

subdivision ofyour nineteenth question in the affirmative.

Yours very truly

ATTORNEY GENERAL OF TEXAS



### BY APPROVED JULY 1, 1941
s/ Grover Sellers

FIRST ASSISTANT Ai'TORNEXGENERAL

GRL;LM/cg Qlenn R. Lewis Assistant

APPROVED OPINION COMMITTEE By EWB, Chairman